Correlation Between Sugentech and Ray

Can any of the company-specific risk be diversified away by investing in both Sugentech and Ray at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Sugentech and Ray into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Sugentech and Ray Co, you can compare the effects of market volatilities on Sugentech and Ray and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Sugentech with a short position of Ray. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sugentech and Ray.

Diversification Opportunities for Sugentech and Ray

0.09

Correlation Coefficient

Sugentech  Ray

Significant diversification

The 3 months correlation between Sugentech and Ray is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Sugentech and Ray Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ray Co and Sugentech is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Sugentech are associated (or correlated) with Ray. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ray Co has no effect on the direction of Sugentech i.e., Sugentech and Ray go up and down completely randomly.

Pair Corralation between Sugentech and Ray

Assuming the 90 days trading horizon Sugentech is expected to generate 1.38 times less return on investment than Ray. In addition to that, Sugentech is 1.49 times more volatile than Ray Co. It trades about 0.09 of its total potential returns per unit of risk. Ray Co is currently generating about 0.19 per unit of volatility. If you would invest  567,000  in Ray Co on December 2, 2024 and sell it today you would earn a total of  292,000  from holding Ray Co or generate 51.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Sugentech  vs.  Ray Co

Sugentech

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sugentech are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sugentech sustained solid returns over the last few months and may actually be approaching a breakup point.

Ray Co

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ray Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ray sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sugentech and Ray

The main advantage of trading using opposite Sugentech and Ray positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sugentech position performs unexpectedly, Ray can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ray will offset losses from the drop in Ray's long position.

The idea behind Sugentech and Ray Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.